Adidas, the German maker of sportswear and equipment, said on Wednesday that it is raising its full-year forecasts for the second time in less than three months ahead of June's UEFA Euro soccer championships. The announcement sent Adidas shares sprinting higher on the Frankfurt stock exchange where they were the biggest gainers, adding more than nine percent in a slightly firmer market.
Adidas, which is changing chief executive later this year, said in a statement that "in light of the strong brand momentum, which is reflected in the better than expected first quarter performance, the group has increased its 2016 financial outlook." "Management now projects sales to grow at a rate of around 15 percent in 2016," when adjusted for exchange rate fluctuations. Adidas had previously been pencilling in growth of between 10 and 12 percent, the statement said.
"As a result, net income from continuing operations is now forecast to grow at a faster rate than the top line and increase between 15 and 18 percent," compared with an earlier forecast of 10-12 percent, it added. The optimism marks good news for the sports shoe maker which has long been struggling to catch up with arch-rival Nike in the United States.
At the start of the year, Adidas announced that 53-year-old Kasper Rorsted, currently head of consumer chemicals giant Henkel, would take over as CEO from Herbert Hainer, 61, who has been at the helm since 2001. But the group is also banking on a series of major sporting events this year - the UEFA Euro championships in France, the Copa America in the US and the Olympic Games in Brazil - to boost brand sales.
Turning to the first three months of the current year, Adidas said that group sales were up 22 percent in currency-adjusted terms at 4.8 billion euros ($5.4 billion). Underlying, or operating, profit jumped by 35 percent to 490 million euros and net profit was up 38 percent at 350 million euros, Adidas said, adding that it would publish full details of its first-quarter earnings on May 4.
Adidas has so far not provided a regional breakdown of its first-quarter results.
But Equinet analyst Mark Josefson said that the group was likely to be performing strongly in Europe, "which means that delivery of the football merchandise ahead of this summer's EURO Championship in France is likely to have been a key driver."
However, for the group to have performed so strongly, "it necessarily means that brand Adidas is back in vogue across the board, not just football in Europe," Josefson said. Simon Irwin, at Credit Suisse, said that the sports apparel market appeared to be doing well globally, particularly in Europe and in China, with Adidas in good form. The group's new NMD sneaker, launched in March, appeared to be out of stock everywhere, the analyst noted.
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